Articles
Educational notes and personal perspectives on business valuation, transaction analysis and financial modelling. Content is general in nature and does not constitute professional advice. New articles coming soon.
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LBO Basics: How Private Equity Underwrites a Deal
A leveraged buyout (LBO) model answers one core question from a financial sponsor’s perspective: if we fund most of this purchase with debt, put in a relatively modest amount of equity, and run the business for 3-7 years, what return do we walk away with? The Sources and Uses Every LBO starts with a sources…
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Cross-Border M&A: The Valuation Wrinkles a Domestic Playbook Misses
A cross-border acquisition runs the same fundamental playbook as a domestic one — valuation, diligence, structuring, close — but several assumptions that are safe to make domestically stop being safe the moment a deal crosses a border. Currency Risk Runs Through Everything Should the valuation model be built in the target’s local currency or the…
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Airport PPPs: Why Non-Aeronautical Revenue Is the Real Wildcard
Airport public-private partnerships are unusual among infrastructure concessions because a meaningful share of revenue often comes from sources that have nothing to do with airplanes — retail, parking, car rental concessions, and property development. Modelling that revenue stream well separates a defensible bid from an optimistic one. Two Very Different Revenue Streams Aeronautical revenue —…
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Renewable Energy Project Finance: Key Modelling Considerations
Renewable energy projects — solar, wind, battery storage — are financed on project finance principles similar to toll roads or hospitals, but with their own set of modelling wrinkles tied to how the underlying asset actually generates revenue. Revenue Structure Drives Everything A project with a long-term power purchase agreement (PPA) at a fixed price…
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Fairness Opinions: When and Why They’re Needed
A fairness opinion is a formal, independent assessment of whether the financial terms of a proposed transaction are fair, from a financial point of view, to a specific group of stakeholders. It’s not the same as a valuation report, and it serves a distinctly different purpose. When They’re Typically Required What the Opinion Actually Says…
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Earn-Outs in M&A: Bridging the Valuation Gap
When a buyer and seller can’t agree on price — often because they disagree on the target’s growth prospects — an earn-out lets both sides be right, at least on paper. It defers part of the purchase price, contingent on the business hitting agreed future performance metrics. Why Earn-Outs Get Used Structuring Considerations The metric…
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Quality of Earnings: What Buyers Really Look For
A quality of earnings (QoE) report is one of the most consequential deliverables in a transaction — it either confirms the story the seller is telling, or it doesn’t. Here’s what a rigorous QoE review actually digs into. Beyond the Reported Numbers QoE isn’t an audit — it doesn’t opine on whether financial statements comply…
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Valuing Stock-Based Compensation Under ASC 718
Stock options, restricted stock units, and other equity awards need to be fair-valued at grant date for financial reporting purposes — a valuation exercise that sits at the intersection of option pricing theory and company-specific judgment calls. Choosing a Valuation Model The Black-Scholes model remains the most widely used for standard time-vested options due to…
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EBITDA Adjustments and Add-Backs: Where Sellers and Buyers Disagree Most
“Adjusted EBITDA” is one of the most negotiated numbers in any valuation or M&A process. The reported figure is rarely the starting point for a deal — it’s the adjustments layered on top that determine the multiple’s actual base. Common, Defensible Adjustments Where It Gets Aggressive Sell-side advisors sometimes propose add-backs for costs that look…
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Precedent Transaction Analysis: Strengths and Limitations
Precedent transaction analysis values a business based on multiples paid in comparable historical M&A deals. It’s a staple of the market approach — and one that requires more caution than it’s often given credit for. Why It’s Useful Unlike guideline public company multiples, precedent transactions capture a control premium and, implicitly, whatever synergy value a…
